Osinbajo Lists Reasons Why CBN Must Change Its Foreign Exchange Policy to Save Naira
- Yemi Osinbajo has explained why the Naira is currently in a slump despite interventions
- Osinbajo stressed that the current exchange rate management is not working, and there is a need for a change
- This is the second time Osibanjo has raised questions about the central bank of Nigeria's exchange rate policy
Nigeria's Vice President Yemi Osinbajo has called on Godwin Emefiele, CBN Governor, to manage the country’s foreign exchange rate better.
According to Osinbajo, the current exchange rate management continues to be an issue and has widened the gap between the black and official markets.
Osinbajo spoke at the Ministerial Retreat organised for Ministers, heads of government parastatals, and service chiefs at the State House, Abuja, which he also shared on his Twitter page.
Source: Twitter
The Vice President stated that the first is fiscal and monetary policy synergy while adding it had led to unnecessary drawbacks in the present administration's economic performance and planning.
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Osinbajo said:
“Our exchange rate management continues to be an issue. The naira exchange rate to convertible currencies continues to face significant downward pressure because demand substantially outstrips supply.
“That is just the reality. On one hand we have tried demand management and rationing, which has not really worked because fixing the price while the parallel market reveals a massive arbitrage merely creates the opportunity for massive rents.
“It will also compound the backlog of remittances for foreign businesses who want to repatriate their earnings. The discussion that we must now have and going forward is how best to manage the situation by finding a mechanism for increasing supply and moderating demand which will be transparent and will boost confidence.
Osinbajo further called for a more market-driven approach will be best, some price discovery within the context of a managed float is certainly required, AriseTv reports.
He stressed:
"Some efforts at controlled price discovery that had been made in the past include the Foreign Exchange Market (FEM), interbank Foreign Exchange Market (IFEM), various iterations of the Dutch Auction System. (DAS), Wholesale Dutch Auction System (W-DAS), Retail Dutch Auction System (R-DAS).
“While they may not have been perfect it would appear as if the rules were clear and there was relative stability. When people know how they can access foreign exchange competitively, this will boost confidence and inward flows will increase.”
Naira breaks record, suffers worst depreciation against US dollar at official market, CBN advises Nigerians
Recall that Legit.ng reported that Nigeria's currency, the Naira, has continued to fall in value against the US dollar, and it is now officially at its lowest level at the official market.
According to FMDQsecurities, where Naira is officially traded, investors and exporters paid N441.17 to a dollar on Tuesday, 11 October 2022.
This is the first time in history that Nigerians will be paying above N440 to buy a dollar at the official rate.
Source: Legit.ng
